Medill News Service article - Published: Nov. 27, 2001

Boeing, Chicago Fed heads: Economy is unpredictable

By Patrick Cooper
Medill News Service

Two of Chicago's most powerful businessmen agreed in speeches Tuesday morning that the current economy tips the scale somewhere between the ugly and the unknown.

Boeing Chairman Philip Condit and Chicago Federal Reserve President Michael Moskow painted a dour picture for business leaders gathered at the Chicagoland Chamber of Commerce annual forecast breakfast. Their words came a day after officials formally declared the United States to be in a recession.

The September 11 attacks have left the U.S. economy in unfamiliar territory, Moskow said. "We now expect the economy to improve next year, but the timing of that recovery is uncertain."

The uncertainty comes from obvious yet unpredictable factors: the ongoing war in Afghanistan, continuing threats of domestic terrorism, needs for security improvements and household decisions to spend or save money.

Refinements to the nation's economic system during past decades as well as technological improvements have helped absorb the brunt of the crisis, but "the attack on Sept. 11 was a shock heretofore unimaginable," Moskow said.

"Some of the immediate effects of the attacks have dissipated," he said. But "looking ahead, we are likely facing a period of very sluggish economy."

Despite the short term outlook, Moskow emphasized the economy's potential for a turnaround, with aid coming from monetary and financial stimulus packages already on their way.

Boeing's Condit too saw hope only in the long term for air transportation, an industry he called "inexorably tied with economic growth."

"There is a segment of the population that has already decided they're not going to fly right now," Condit said.

Although time and progress in the war on terrorism would offer encouragement to travelers, he estimated it would take "28 to 42 months" for crowds to return at pre-Sept. 11 numbers.

While the numbers are down, he said the airline industry should use the time to change the system and "prepare it for the resurgence" in the future. Condit also had plenty of ideas of his own to suggest for this change.

He pushed a new air traffic system, optional national identification cards, high-speed Internet access in airports and airplanes and more advanced baggage screening.

National ID cards, using biometric information like fingerprints and face recognition, would aid travelers who trade some of their privacy for speed, he said. Avoiding the controversy over mandatory ID cards, the system by his design would be optional.

"I think most of us would opt for that system, quickly," he said.

If his plans were fully embraced by the government and airline industry, he said "you could be well on your way" to implementing these ideas within six months.